The Dollar Rally Continues

So… Janet did some Yellin’ and thunder roared upon the common people of the market.

I only found out that there was an FOMC meeting when I woke in the middle of the night and took a look at the charts. It’s almost impossible to go through the analysis while prices are flashing one way and then the other. So I went back to sleep. I can’t say I’m too surprised with the result. While I had potential lower levels of the Dollar as potential retracements, certainly in EURUSD the correction had been deep enough. Therefore, the Dollar upside has resumed and that’s a good thing… but don’t get too excited. It’s going to remain a little choppy with some modest corrections likely.

The next clue is in GBPUSD… that didn’t deepen as much as I would have liked and the break to new highs has confirmed the low is in place. This is going to provide some interesting developments now. Right now, with the Scottish referendum waiting on an “aye” or “nae” decision we may just see some consolidation. However, as I mentioned earlier in the week, from my take on GBPUSD we’ll see a “nae” vote that will take it higher…

The Aussie has topped out also and is on its way down to new lows. However, just like the other currencies I don’t think we’re going to see a frenetic follow-through. Therefore, take this step by step and note momentum conditions as possible clues.

And as I mentioned in USDJPY, the correction down to 106.80 just couldn’t be considered an impulsive move and therefore we’ve seen some solid gains – even higher than I would have liked. The interesting thing about the extent of the rally is not this particular daily leg but the next one… It has already told me that my previous estimate for the upside target will be even higher than I had thought… However, there’ll be a lot of other stuff going on in between. For now, though, EURJPY has found a temporary high and should see losses. I can’t imagine EURUSD is going to provoke enough downside to satisfy that correction so it does suggest it’ll get some help from USDJPY…

Now the Yellin’ is over I suspect the hectic development will calm down and revert to choppy development again.